Inheritance Tax for foreign spouse

mlhpsc

I live in Thailand with a Thai wife who has no tax or residence history in the UK.  I thought, as my non-pension assets are only just above the £325,000 IHT threshold, that I would be able to leave the vast bulk of my assets to my wife tax free.  However, it seems from 2027, under new legislation, my circa £400,000 SIPP will now be subject to IHT.  I did think that it would still be IHT free, if left to my wife.  But now I am reading suggestions that the free IHT for spouses does not apply to non-UK citizens.
Is anybody able to shed light on this?  Am I able to leave all my assets IHT free to my wife, even if she is non-UK resident, tax payer or citizen?
Thanks for any input.

Ayr_Rage

Have a look at this.

https://www.ashtonslegal.co.uk/insights/news-for-individuals/international-love-mixed-domicile-spouses-and-inheritance-tax/

Albermarle

It makes sense really. If you leave all your assets to a UK domiciled spouse, then when they die what assets are left will be subject to IHT if large enough.
If you leave them to a non domiciled spouse then the UK Treasury is going to miss out on any future IHT.

OP Just note that the proposal to include unused DC pension funds in calculations for IHT purposes, is not due to be law until 2027 and the details of the legislation are still under discussion. 
In any case the proposal as it stands is that the pension will not actually be included in your estate, so it should continue not to feature in any will, and you should make sure your expression of wishes form is up to date.

poseidon1

Albermarle said:

It makes sense really. If you leave all your assets to a UK domiciled spouse, then when they die what assets are left will be subject to IHT if large enough.
If you leave them to a non domiciled spouse then the UK Treasury is going to miss out on any future IHT.

OP Just note that the proposal to include unused DC pension funds in calculations for IHT purposes, is not due to be law until 2027 and the details of the legislation are still under discussion. 
In any case the proposal as it stands is that the pension will not actually be included in your estate, so it should continue not to feature in any will, and you should make sure your expression of wishes form is up to date.

HMG's rationale for treating non UK domiciled spouse inheritors differently from UK dom spouses, was entirely predicated on the assumption that the inheriting non dom spouse would take the 'money' and escape back to their countries of origin thereby depriving the UK of its hard earned entitlement to IHT..

Although the OP's question here relates to IHT on pension pots and he himself appears to have no other UK situs assets, in reality for many mixed dom marital situations, it is the UK house which forms the backbone of the non dom spouse's estate , which would be liable to IHT on that spouse's death regardless of their domicile for iHT purposes.

However as indicated in the link provided by Ayr_Rage, there should be no reason why the UK dom election option should not be available in respect of future pension pots in the same way as any other IHT assets currently receivable by non dom spouses. The spouse merely needs to be aware the option exists, and the implications of excercising it.